Mantras Ambulance Services, Inc. Case 1: A Seller-Side Business Valuation Case

Author
Janet R. Jones, University of Minnesota – Duluth
Region
North America
Topic
Accounting & Finance
Length
6 pages
Keywords
business valuation
discounted cash flow model
capitalization of earnings
professional judgement
market approach
Student Price
$4.00
Target Audience
Graduate Students
Undergraduate Students

The purpose of this decision case is to discuss business valuation in the context of a privatelyowned service company. Marie Wade owned and operated Mantras Ambulance Services, Inc., a successful ambulance company, for 30 years. In 2017, as she approached retirement age, she wanted to spend more time with family, pursue other interests, and was concerned about the future of her business. In a twist of fate, Marie received an email from a prospective buyer interested in her business. She enlisted the help of Sarah Washington, the company’s CPA, to help her approximate the value of the business. Students are asked to assume the role of Sarah Washington to assist Marie by using various approaches to business valuation.

Learning Outcomes
  1. Understand the distinction between a CPA and a certified valuation expert with regard to performing valuation services for clients.
  2. Identify various valuation methods utilized in accounting and finance, including the benefits and drawbacks of each method.
  3. Construct a discounted cash flow model, including adequate discussion of assumptions used in constructing the model.
  4. Formulate an estimated business valuation range based upon analysis of financial information.
  5. Produce a written communication to summarize the process used to estimate the value of the business and the valuation range identified in the analysis.

Application: This case is most appropriate for upper-level undergraduate or graduate courses in accounting or finance focused on business valuation or financial statement analysis, specifically courses that cover the discounted cash flows method could include this case in the course material.